The consequences of investment flows between countries
When money moves between countries as investment, it affects jobs, incomes, exchange rates, and the balance of payments in both the sending and receiving country.
Real World
When Nissan opened its Sunderland factory in 1986 as FDI into the UK, it created over 7,000 direct jobs, boosted UK export earnings, and improved the UK's current account on the financial account side.
Exam Focus
Distinguish FDI from portfolio investment in answers — examiners penalise conflating the two when assessing long-run versus short-run consequences.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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